Chidambaram promises
6 lakh SHGs in 3 yearsNew Delhi, October 30Finance Minister P. Chidambaram today said that about six lakh self-help groups (SHGs) would be set up in the next three years.
Finance Minister P. Chidambaram interacts with women entrepreneurs at a national conference of self-help group leaders in New Delhi on Saturday. — PTI
photo

India-Singapore relations move beyond trade, says ministerBangalore, October 30Relations between Singapore and India are moving “beyond trade, into multiple interaction points” and there is much that the two countries could achieve together, Singapore Deputy Prime Minister Dr Tony Tan said here today.

Govt aims to make India a gold-trading hubNew Delhi, October 30The government has decided to set up a high-powered committee to recommend measures for permitting banking, financial institutions and mutual funds in futures commodity markets for hedging purpose.

Aviation Notes

Carpet scam resurfaces
Air-India (A-I) and law suits have become synonymous. From cabin crew to Director (Commercial), legal wrangles continue to figure in various courts bringing disrepute to the national carrier which was once a pride for the aviators.

Investor guidance

Sip imposes artificial discipline on investors
Q: In one of magazines, I read that Sip (Systematic Investment Planning) in mutual funds is the best option for an investor who does not have much time to devote to study for equity investment. I want to invest in Sip investment. Could you please suggest which SIP method is right to invest?

The final broadsheet edition of The Times is displayed at a newsstand on Saturday in London. The Times, a 217-year-old newspaper, is abandoning the broadsheet edition in favour of a smaller tabloid or a compact edition. — AFP

“It is a matter of serious concern. We are opposed to it and we don’t think this is a proper thing to do. It will not be in the national interest,” he said on the sidelines of the party’s National Council meeting here.

He was reacting to the statement by Union Finance Minister P. Chidambaram, who had indicated greater FDI inflow including foreign banks picking up stakes in Indian banks.

Mr Raja said foreign banks would “not abide by the Reserve Bank of India (RBI) rules and regulations” and their funds would not be used for developmental purposes in India.

Maintaining that the matter should be seriously looked into and there was “no simple way out,” Mr Raja said the CPI National Council would deliberate on it in detail.

Meanwhile, the Communist Party of India (Marxist) today asked the UPA government to bear the financial burden of welfare schemes like National Employment Guarantee Scheme.

“State governments are under severe financial strain. The UPA government must generate resources on its own. Besides we will insist that the government should not mingle the Food for Work programme with the employment scheme. These are two separate projects,” CPM Politburo member Sitaram Yechury told on the sidelines of the party’s Central Committee meet here.

He said the Central Committee reiterated their support to the employment guarantee scheme and similar welfare measures contained in the CMP and suggested that the financial burden of these projects must be borne by the Centre alone.

New Delhi, October 30
Finance Minister P. Chidambaram today said that about six lakh self-help groups (SHGs) would be set up in the next three years.

“If the response is positive we can target a higher 6-6.5 lakh SHGs by 2006-07. I will ensure that banks perform their duties (of stepping up loans),” he said.

“Only 10 per cent of bank credit goes to small borrowers, who account for 72 per cent of the bank accounts. That explains the systemic deficiency,” Mr Chidambaram said while speaking at a national conference of SHG leaders here.

Presently, there are 10,79,000 SHGs in the country and a large majority of these (about 90 per cent) are specifically for women.

“What gives me confidence is—a record 98 per cent of all loans given to small borrowers are promptly repaid. Even industrialists do not have this record,” Mr Chidambaram said adding the government would take steps to ensure that the volume of loans to small borrowers is increased.

Bangalore, October 30
Relations between Singapore and India are moving “beyond trade, into multiple interaction points” and there is much that the two countries could achieve together, Singapore Deputy Prime Minister Dr Tony Tan said here today.

Unveiling the fifth ‘inventor’ building at the International Technology Park Ltd (ITPL), he stressed the importance of “a free flow of goods, services, ideas and technologies” and said Singapore and India could provide many facilities and services for companies looking for comparative advantages across national borders, in a time of increasing expectations and competitive pressures.

Tiny Singapore has over 7,000 companies, of which 60 per cent have made it their regional headquarters. Over 1,000 of these have their regional or global manufacturing facilities house there, he added. The ITPL is a joint venture between Tata Industries (the investment arm of the Tata Group), a Singapore consortium led by Ascendas Pte., and the Karnataka state government.

Mumbai, October 30
In a bid to regain its market share, Indian Airlines would launch “IA family ticket” scheme from Monday.

Under the scheme, being introduced during the peak season, two children below the age of 12 can travel free with two full-fare paying adult passengers, an IA release said here today.

The scheme, on till January 31, would be valid for one way or round trip travel on domestic sectors, except sectors operated by ATR42 and Dornier aircraft, in economy class only.

Also, a maximum of two children between 12 to 18 years can avail a 50 per cent discount on normal published fare while accompanying two full-fare paying adults. In case one child is below 12 years and the other between 12 and 18, the former can travel free while the latter gets a 50 per cent discount, the release added.

In the first five months of this fiscal, Jet Airways held its lead by flying 43.4 per cent of the total passenger traffic followed by Indian Airlines with 38.8 per cent market share.
— PTI

New Delhi, October 30
The government has decided to set up a high-powered committee to recommend measures for permitting banking, financial institutions and mutual funds in futures commodity markets for hedging purpose.

Inaugurating the International Gold Summit here on today under the aegis of The Associated Chambers of Commerce and Industry of India (Assocham), Minister for Commerce & Industry, Mr Kamal Nath said that the committee, whose constitution will be announced in the next three days, will also suggest ways and means for further liberalising the metal trade regulations so that India becomes a leading regional hub centre for gold and silver trading in the world.

The Minister announced that the Committee will be asked to submit its recommendations latest by December 31, 2004, so that the Commerce & Industry Ministry forwards its suggestions to the Finance Ministry before the finalisation of the budget proposals for 2005-06 to accommodate the Ministry’s view point for further liberalization of the metal trade in the commodities market.

Aviation Notes

by K.R. Wadhwaney

Carpet scam resurfaces

Air-India (A-I) and law suits have become synonymous. From cabin crew to Director (Commercial), legal wrangles continue to figure in various courts bringing disrepute to the national carrier which was once a pride for the aviators.

Besides new cases, buried allegations and counter-allegations are being ‘reopened’ adding fuel to fire. Some senior officials have proceeded on ‘forced’ leave as rival factions have started sharpening knives for the ensuing battle of supremacy.

A fresh round of trouble has resurfaced as A-I plans to render four directors on its board as functional directors. In this list of officials, there is one who has been the root cause of active politicking.

The new chairman-cum-managing director V. Thulasidas, a seasoned bureaucrat, has been unable to bring two factions together. Actually, peace had been brought about when Indian Airlines’ chairman Sunil Arora held an additional charge of A-I. But now, the two groups are once against out in the court to settle their personal grievances.

The 11-year-old case that has been filed in a court pertains to carpet scam. It is learnt more such cases are likely to be ‘reopened’. As senior officials are locked in the court, the performance of the airlines continue to get adversely affected.

Lax security

Similarly feeble state of health dogs the Airports Authority of India (AAI) and the Indira Gandhi International Airport (IGIA). Freak instances continue to occur. They range from ‘romance’ on a two-wheeler on the runway to an employee getting run over under the wheels of the passenger shuttle. There have been security lapses and passengers carrying ‘fake’ revolvers have gone undetected.

Some employees have been suspended. Meetings of Bureau of Civil Aviation Security (BCAS) and some other security agencies have been held. The Central Industrial Security Force (CISF) officials have been asked to improve their functioning.

After the Kandahar hijack and 9/11 the BCAS has banned carrying of lookalikes of weapons, bombs and sharp-edged instruments (even toys) on flights. Some carriers had even introduced plastic cutleries instead of steel-made over. Yet the CISF officials on X-ray duties falter.

Investor guidance

by A.N. Shanbhag

Sip imposes artificial discipline on investors

Q: In one of magazines, I read that Sip (Systematic Investment Planning) in mutual funds is the best option for an investor who does not have much time to devote to study for equity investment. I want to invest in Sip investment. Could you please suggest which SIP method is right to invest?

— Pawan Mittal

A: Though SIP is a popular form of investment, I do not approve of it personally. It imposes an artificial discipline on the investor. For example, sometimes, perhaps because of mitigating circumstances in a given month, investment may not be possible. Yet, Sip forces him to invest the earmarked funds. There may be a period in stock markets when the valuations are either too high or going down rapidly when a wait and watch attitude would be more prudent. Or an investor may even have the money on hand before the due date of Sip.

An investor should invest the investible funds, as soon as possible and as much as possible, keeping in view the economic and political climate. He should have the freedom to decide the scheme and whether or not he should invest.

The compulsory savings aspect of Sip is only of psychological value. The investor should have a self-imposed discipline and not artificial compulsions. However, if self-discipline and some amount of homework is not possible, then Sip is advisable.

UTI Master Shares

Q: I have the following query:

1) I had purchased 10,000 units of UTI Master Shares at Rs 10.80 per unit from stock market on 15-05-2003, when Master Share was listed on NSE. I redeemed them on 25-05-2004 @ Rs 17 per unit from Unit Trust of India. I could not sell it in the stock exchange because it was delisted around October 2003. Kindly inform whether 20 per cent tax would be charged on the above capital gains or 10 per cent tax would be imposed because when I purchased it the Master Share units were listed securities but when I redeemed them the units were not listed.

2) I had also purchased 10,000 units of Morgan Stanley growth fund at Rs. 8 per unit on 15-05-03 from NSE and sold the same of 25-05-04 @ Rs 14 per unit on May 25, 2004, through the same exchange. Please inform whether 10 per cent tax will be charged on the long term capital gains because the units were listed in national stock exchange.

— Rajiv

A: Since the Master Shares were sold before October 1, 2004, the new regime of exemption of capital gains on MF units if sold on a recognised stock exchange or repurchased from the MF directly, does not apply. The old provision of 20 per cent with indexation or 10 per cent without indexation, whichever is lower, applies, whether you have sold it on any stock exchange or repurchased from the MF directly.

The same provision applies to Morgan Stanley units.

LTCG & STCG

Q: I have been a regular reader of your column. I wish to seek some clarifications so that I can take due care in time in planning my investments. Kindly spare some moments to reply to these small issues:

1. Long Term and Short Term Capital Gains on non-equity MFs. Is it correct to presume that wherever STT is not applicable, the LTCG and STCG will continue to apply at the earlier prevailing rates? Or, is it that once the STT regime has come into operation, even for the transactions in debt schemes of MFs will not attract any LTCG and the STCG rate will be 10 per cent only?

2. If the earlier prevailing rates of LTCG and STCG are going to continue on the transactions of non-equity MFs, does it also imply that set off of capital losses will also continue on the earlier prevailing basis?

— Krishna Kumar

A: You are right.

1. For abundant precaution, I would like to modify your statement a little.

If STT is not applicable at the time of sale of equities or MF units, the LTCG and STCG will continue to apply at the old rates.

In other words, if you sell equities on a recognised stock exchange, purchased before October 1, 2004 or through IPOs or right issues, either before or after the designated date, the new regime will prevail because STT is applicable to the sale transaction. However, if the sale takes place outside any recognised stock exchange, STT is not applicable and the old regime would prevail even if the purchases were made on a recognised stock exchange after October 1, 2004 and consequently, STT was paid on the purchase transaction. The same structure is applicable to units of MFs.

2. The carried forward LTCL and STCL can be setoff against the current LTCG (unless, it is exempt) and STCG. The only condition is LTCL cannot be setoff against STCG which was the provision incorporated because STCG was, in most of the cases was taxed @ 30 per cent or higher and LTCG was @20 per cent and in some cases, @10 per cent. Now that STCG for equities and equity based Schemes of MFs is slated to be taxed @10 per cent, the situation has reversed but the provisions have not.

Forex reservesMumbai, October 30
India’s foreign exchange reserves surged by $ 980 million to cross $ 120 billion mark during the week ending October 22, 2004. Foreign currency exchange reserves for the week under review grew by $ 980 million to $ 1,20,616 million, the Reserve Bank of India said in its weekly statistical supplement released today.
— PTI

BSNL websiteHisar, October 30
The BSNL website of Hisar Telecom district was launched by the Deputy Commissioner, Mr Balbir Singh Malik, here today. Mr R.K.Tyagi, General Manager, BSNL, said the website would cater to the needs of the consumers of Hisar Telecom district, which comprised Hisar, Fatehabad and Sirsa districts. Mr Tyagi said the website, www.hisar.bsnl.co.in, would provide information regarding bills, directory enquiry service, apart from details of customer service centres and tenders.
— TNS

Visit to PakBhopal, October 30
A 30- member business delegation will visit Pakistan from November 1 to 10 for exploring avenues of bilateral trade and economic cooperation between the two countries. The president of PHDCCI will lead it. According to a press release, the delegation will consist of captains of industry from North India. They will visit Lahore, Karachi, Islamabad and Gujranwala.
— OC

LML modelsHyderabad, October 30
Two-wheeler major LML today launched three motor cycles in different segments here. The new products have innovative engineering design and technology with prices ranging between Rs 39,000 and Rs 43,500. The three products — LML Freedom Topper and LML Freedom Prima 125cc (prima with 4 gears and five gears model) — come with a delta 4 digital ignition.
— PTI